THE CORPORATIONS LAW

CHAPTER 2L - DEBENTURES

PART 2L.4 - TRUSTEE

SECTION 260JA   TRUSTEE'S DUTIES  

260JA     The trustee of a trust deed entered into under section 260FA must:

(a)  exercise reasonable diligence to ascertain whether the property of the borrower and of each guarantor that is or should be available (whether by way of security or otherwise) will be sufficient to repay the amount deposited or lent when it becomes due; and

(b)  exercise reasonable diligence to ascertain whether the borrower or any guarantor has committed any breach of:

(i) the terms of the debentures; or

(ii) the provisions of the trust deed or this Chapter; and

(c)  do everything in its power to ensure that the borrower or a guarantor remedies any breach known to the trustee of:

(i) any term of the debentures; or

(ii) any provision of the trust deed or this Chapter;

unless the trustee is satisfied that the breach will not materially prejudice the debenture holders' interests or any security for the debentures; and

(d)  ensure that the borrower and each guarantor complies with Part 2K to the extent that it applies to the debentures; and

(e)  notify ASIC as soon as practicable if:

(i) the borrower has not complied with section 260GE, 260GF or subsection 318(1) or (4); or

(ii) a guarantor has not complied with section 260HC; and

(f)  notify ASIC and the borrower as soon as practicable if the trustee discovers that it cannot be a trustee under section 260FC; and

(g)  give the debenture holders a statement explaining the effect of any proposal that the borrower submits to the debenture holders before any meeting that:

(i) the Court calls in relation to a scheme under subsection 411(1) or (1A); or

(ii) the trustee calls under subsection 260KB(1); and

(h)  comply with any directions given to it at a debenture holders' meeting referred to in section 260KA, 260KB or 260KC unless:

(i) the trustee is of the opinion that the direction is inconsistent with the terms of the debentures or the provisions of the trust deed or this Law or is otherwise objectionable; and

(ii) has either obtained, or is in the process of obtaining, an order from the Court under section 260NA setting aside or varying the direction; and

(i)  apply to the Court for an order under section 260NB if the borrower requests it to do so.

Note 1:

Paragraph (g) - Section 411 relates to compromises and arrangements.

Note 2: Section 260JC deals with indemnification in respect of a trustee's liability to the debenture holders.